Why Zip skyrocketed 16.95% on Tuesday

The Zip share price rose firmly after the company released its Q3 trading update.

Zip share price ↑

The Zip (ticker: Z1P) share price closed out Tuesday’s session up 16.95% at $9.73 per share. This came after the company released an impressive set of growth figures as part of its Q3 trading update.

Volatility – both to the up and downside – has become commonplace for the likes of Zip and others in the buy now pay later space.

This Q3 trading update, which was laden with the word ‘record’, whipped the market into a frenzy by the close.

Overall, Zip revealed the quarter to be a particularly positive one – dominated by both strong top-line growth and the continued expansion of the company’s brand and ecosystem.

Let's take a quick look at these results:

Results Wrap

On the top-line, Zip said its quarterly group revenue rose 80% – coming in at $114.4 million. Q3 transaction volumes outpaced that, coming in at $1.6 billion, implying a year-on-year growth rate of 114%. Additionally, 12.4 million transactions were made through Zip’s platforms during the quarter – equal to a year-on-year growth rate of 195%.

The Zip ecosystem also continues to exhibit strong growth: customers now total 6.4 million and merchants using the company's platform hit 45.3 thousand during the quarter.

Broken down by region, Australia and New Zealand (ANZ) transaction volumes reached $837.3 million, while customer growth edged up 37%, to 2.6 million.

With ANZ being a significantly more mature market, Zip is able to lean on the growth from Quadpay (its fully-owned US business), which continues to see its growth accelerate.

Indeed, despite the company describing Q3 as 'seasonally quiet’, Zip US transaction volumes jumped a staggering 234% to $762 million and brought in $54.4 million in revenue. In addition to that, 674 thousand US-based customers joined the ecosystem during the quarter.

Watch This Space: With US growth ramping and ANZ growth decelerating, investors are likely now wondering how long it will be before Zip’s US business overtakes its ANZ one. The prize after all, as Afterpay signalled relatively early in the piece, was always the US market. Australia was merely a testing ground.

Other data points worth mentioning:

  • Bad debts edged dropped from 1.93% to 1.78%
  • 1.6 million app downloads were made in Q3

Commenting on the quarterly, Zip’s MD and CEO, Larry Diamond said:

'Our US business was again a standout, confirming our position as truly one of the fastest growing BNPL leaders.'

'We continue to innovate and deliver new features to our customers in line with our mission to become the first payment choice everywhere, every day.'

Others in the space seemed to piggy-backed off Tuesday’s Zip euphoria: Afterpay closed up 3% and Sezzle finished out the session up 8%.

YTD, Zip is up over 70%.

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